Feb 2, 2021
Bitcoin (BTC) saw another jump last Friday and increased by 20% to hit the price of $38k; the surge seems to have been caused by Elon Musk adding #bitcoin to his Twitter bio. The unexpected swing happened after a fairly calm week for the cryptocurrency; while Bitcoin stood surprisingly still, other cryptocurrencies like altcoins Stellar and EOS found themselves doubling in value.
While Musk’s recognition of Bitcoin has never been a secret, adding a hashtag about the asset to his profile with no further explanation has caused a dramatic rally in the market.
“This huge melt-up is due to Elon’s tweet. Musk’s support for Bitcoin creates a safe zone for some of the smaller companies and possibly everyone in the S&P 500 to allocate into Bitcoin,” said managing partner and co-founder of Nexo in London, Antoni Trenchev.
BTCUSD Chart by TradingView
This unexpected and unprecedented jump had Bitcoin skeptics rolling their eyes and comparing it to the recent GameStop/Reddit fiasco.
“I would imagine that the Venn diagram of people who bought GameStop and people who buy Bitcoin has a significant overlap,” said a senior market analyst at OANDA Europe, Craig Erlam, “The kind of rationale to some extent behind what we’ve seen this week kind of links this taking on the institutions, taking on the establishment,” he added.
Elon Musk also tweeted an image containing a play on the fashion magazine Vogue. It featured a whippet in a red sweater and was called ‘Dogue’. Traders attempted to read between the lines and associated it with the Dogecoin.
Dogecoin is a cryptocurrency invented by developers Billy Markus and Jackson Palmer for fun. The coin’s bane comes from the famous Dodge meme, which features a Shiba Inu dog.
This caused the world’s largest cryptocurrency exchange by volume, Binance, to suspend Doge withdrawals for some time as they had run out of Doge addresses, “Our system couldn’t generate new addresses fast enough to match new users coming in. It’s crazy,” said Binance’s representative to Bloomberg.